DIVA Protocol
  • 👋Welcome
  • 🔅Introduction
    • Derivative contracts
    • What is DIVA Protocol
      • What problem does it solve
      • How it works
        • Reference assets
        • Payoff curves
        • Collateral
        • Oracles
        • Settlement
          • Timelines
          • Challenge
          • Status
          • Fast settlement
          • Fallback data provider
        • Fees
        • Compliance feature
      • Vision
      • Terminology
    • What is DIVA Token
      • Owner election mechanism
      • Token distribution
    • DIVA Development Fund
    • FAQ
  • 🌈DIVA App
    • What is DIVA App
    • Overview
    • Create position tokens
    • Trade position tokens
    • Add liquidity
    • Remove liquidity
  • ⚙️Guides
    • DIVA App Training
      • Prepare
      • Testnet
      • Create
      • Trade
      • Add
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      • Settle
      • Redeem
      • Fees
    • Quiz
  • 🪄Use cases
    • Overview
    • Insurance
      • Credit default protection
      • Agrarian insurance
      • DeFi Hack insurance
      • Peg insurance
    • Yield optimization
      • Bullish accumulation
      • Bearish accumulation
    • Risk management
      • Downside protection
      • Increasing cost protection
    • Directional bets
      • Downside bet
      • "Bottom-Is-In" bet
      • Upside bet
      • "Top-Is-In" bet
    • Leverage
  • 👨‍🎓Pricing derivatives
    • Introduction
    • Underlying value
    • Volatility
    • Time
  • ⚓Oracle integrations
    • Overview
    • Tellor
  • ⚒️For developers
    • Overview
    • Technical resources
    • Smart contracts
      • Functions
        • Core protocol functions
        • Getter functions
        • Setter functions
        • ABI
      • Contract addresses
      • Example scripts
    • TheGraph
      • DIVA subgraphs
      • Whitelist subgraph
    • Project ideas
  • 📱Contact & Media Links
    • Social media
  • 👨‍🎓Technical Blog
    • Flash loans in DIVA Protocol
    • NDVI outcome reporting guide for Tellor Reporters
    • Enabling capital efficiency in DeFi
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On this page
  1. Introduction
  2. What is DIVA Protocol
  3. How it works

Fees

Protocol and settlement fees

DIVA Protocol applies the following fees when users redeem position tokens or remove liquidity (% fee applies to the claimable collateral amount):

  • Protocol fee: 0.25%

  • Settlement fee: 0.05%

Example 1: Bob owns 100 long position tokens. Based on the final value reported by the oracle, Bob is eligible to claim DAI 70. At redemption, Bob is returned DAI 69.79 and the remaining DAI 0.21 (0.3%) go to the corresponding fee recipients.

Example 2: Bob owns 100 long and 100 short position tokens which represent a claim on DAI 100 in the contingent pool. When Bob removes liquidity, he is returned DAI 99.7 and the remaining DAI 0.3 (0.3%) go to the corresponding fee recipients.

The protocol fee is allocated to the DIVA treasury and DIVA token holders can vote on how to spend those funds. The settlement fee is typically paid to the data provider. If the data provider fails to submit a value and the fallback data provider has to step in, the fallback data provider will receive the settlement fee. If both don't report, then the fee goes to the DIVA treasury.

Fees are paid in collateral token and retained within the DIVA Protocol until they are claimed by the respective fee recipients. Fee parameters are updateable by DIVA governance up to a maximum of 2.5%.

Purpose of fees

Fees were baked into the DIVA Protocol to achieve the following:

  • Ensure long-term viability and sustainability of the DIVA Protocol project

  • Incentivize users to create position tokens that they can realistically sell

  • Incentivize data providers to remain honest

Apps that build on top of DIVA Protocol may introduce their own fees on top. DIVA App, for instance, will implement a small trading fee that will be directed to the DIVA treasury.

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Last updated 2 years ago

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